The Ouya Game Console fits a gap left between mobile gaming and full-powered consoles. But being stuck in the middle is hard–just ask Flip.

Why can’t I play my mobile games on my television? It’s a simple problem with a million solutions, none of which have taken over the world just yet. Will my phone Wi-Fi stream games to my TV, or will my TV just have an app store? What about Google TV? What about Apple TV? Where are all the apps we were promised with those? So far, it’s all been a tease.

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Opportunities for new products can always be found in the boundaries between what already exists.

Ouya is a simple solution. It’s a $100 box that’s about the size of a Rubik’s Cube. It’s fit with a powerful smartphone chipset. And it can play pretty much any Android game or other app on your TV through a console-quality controller that features a d-pad, triggers, buttons, and even a touchpad. Hackers are free to open it with a normal screwdriver. And every game it runs will be free-to-play. Their proprietary Android app store will only allow developers to charge for components like extra content packs. Games always download at no cost whatsoever.

Notice what has happend here: Ouya aims to take advantage of a gap in the market. Console games usually depend on a Hollywood-style production process, best exemplified by the Call of Duty franchise. Games become $60 events. But mobile gaming has upended that, showing that there’s a massive market for games which aren’t treated so preciously. Play it once? Meh, it was only $0.99. Our attitudes towards gaming have changed, even though platforms like the Xbox aren’t adapting and mobile platforms still can’t match the immersive experience of TV-tethered consoles.

That’s a powerful pitch, to judge by the response that Ouya has gotten. After raising angel funding and enlisting Yves Behar to design the system, just this Monday, it went live on Kickstarter and quickly exceeded $2.5 million in barely 24 hours, making it the most successful one-day total on Kickstarter to date. It feels like they’ve done everything right: They’ve built an easy way to play Android games on the television, and they’ve priced it cheap. Plus, they’ve clearly struck a chord with the online masses.

Yet Ouya’s ultimate success is far from certain, the problem being that it’s the perfectly designed system for today, not a future-forward, paradigm-challenging product of tomorrow. It’s a finely honed device for the gap in the market that exists now, between mobile and console games. But it doesn’t launch until March of 2013. And with competition from both the cell phone makers and the console makers (who, in cases like Microsoft, are single massive companies), it’s hard to imagine stiffer competition. What’s to stop Xbox from moving downstream, towards cheaper games? What’s to stop Android from designing better integration with your TV? And if the long-rumored Apple TV ever materializes, ushering in a host of copy cats, Ouya may very well be toast, overnight.

If the long-rumored Apple TV ever materializes, Ouya may very well be toast, overnight.

I’m not just being curmudgeonly. There’s quite a bit of precedent here. Remember the Flip? The Flip was the first camera to make taking videos simple and affordable. It launched in 2006. The company who built it was bought by Cisco for $590 million in 2009. And then Cisco just stopped making it in 2011 because cell phones already did the same thing. Another example might be the Litl. It was a simple, lightweight home computer with a focus on multimedia. You were meant to use it while leaning back on the couch. Then the iPad happened. Who would tell their grandma to buy a Litl today? In the case of Flip, its neighboring products evolved enough to render it moot. In Litl’s case, they were crushed by a better-funded, sexier solution.

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“Today we’re a console and a controller. At the end of the day, the console will go away and be a chipset on the TV,” admits Uhrman. “What will be important is the interface, which is the controller, and a game and content ecosystem. It’s about the experience. If the TV becomes smart and intelligent enough to run games, it’s still necessary to have a great experience that’s responsive, a phenomenal library of content from games to apps, and that’s what we’re building regardless of where tech goes. We’ll be there because we’re providing the entire solution.”

Except that they aren’t providing the entire solution, not yet. The reason that people are so excited about Ouya is that well-priced box, the intelligently designed part of the product with a clear value proposition. The controller is interesting, but easily replaced by a hungry market of peripheral makers. The ecosystem–the app store full of free-to-play titles–doesn’t actually exist yet, and Google’s, Amazon’s and Apple’s are only growing bigger by the day.

Quite simply, the Ouya is a product caught in the middle. User needs–and opportunities for new products–can always be found in the boundaries between the products that already exist, as tempting, custom-molded fabrications that fit right between competitors without a millimeter of give. Unfortunately for so many innovators, in the middle is precisely where you’re most in danger of getting crushed.

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About the author

Mark Wilson is a senior writer at Fast Company. He started Philanthroper.com, a simple way to give back every day